Inside That $14 Million Summer Fest Economic Study

Earlier this month, the producers of Free Press Summer Fest released the results of an economic impact analysis they had commissioned from the University of Houston about the 2012 festival, which took place this past June 2 and 3 in Eleanor Tinsley Park. The figure they arrived at is certainly impressive: According to the study, Summer Fest juiced the coffers of local merchants and other businesses by an estimated $14 million.

But what does that mean? It's easy to throw out a number like $14 million, but figures like that don't really mean much to most laymen unless there's some kind of context. It sure sounds like a lot, but is it really?

Last week Rocks Off spoke with one of the men who co-authored the study, University of Houston economics professor Steven G. Craig, who worked with Evert Crawford, Director of the Institute for Regional Forecasting at the Hobby Center for Public Policy. What he found most impressive, he says, was not the figure itself so much as how much money generated by Summer Fest came from out-of-town visitors.

Photo by Groovehouse

"What [the study] tries to get at is that some activities in a city bring new resources into our area," Craig explains. "So with the example of this festival, the new resources are the visitors that came to town to go to this festival from out of town - so people from Austin, and even as far as New Orleans, like that came here."

Comparing data provided by Summer Fest with visitor-expenditure numbers from the Greater Houston Partnership, the two determined that more than 25 percent of people who attended the festival came from out of town. (Total attendance is listed at 81,000 people.)

They also allowed what Craig calls an "import substitution," which tries to account for people living in Houston who went to Summer Fest instead of going out of town for the weekend.

"That's slightly problematic, I guess, but to be up front we've gotta be able to say that we did that," Craig says.

That $14 million is the estimated amount of total output added to the local economy. Craig and Crawford also measured the amount of employment (FPSF added 104 full-time equivalent jobs), labor income ($5.4 million) and value-added income ($8.2 million). The different numbers represent, says Craig, "in some sense, three different views of the same thing."

The study is a composite of how Summer Fest affected a number of different local industries -- enough to make a Top 10 list, but interestingly, that Top 10 only accounted for a little more than half of the $14 million total output (about $7.5 million). Most of them were about what you'd expect: Food and drink providers, facilities support (waste management, equipment rentals) and entertainment promoters, but also real estate (hotels, rented-out dwellings) retail stores, and medical services.

Our favorite was "Oil and Gas Extraction," which the study says added about as much output as entertainment promoters, or approximately $750,000. Why?

"I guess what I'll say is that Houston is an oil town," Craig chuckles. "I saw that too, and I don't think they're drilling any oil wells for the guys who bought gas to drive back to Dallas."

Snoop Dogg at FPSF '12

Photo by Marco Torres

For comparison's sake, Rocks Off dug up an economic impact analysis of the Austin City Limits Music Festival, prepared by the Austin consulting firm Angelou Economics and covering the years 2006-09. It tracked the same types of economic effects as the U of H survey: Direct (ticket sales, rentals), indirect (sales increases by local businesses, more jobs created) and induced (people benefiting from ACL then spending more money).

That study estimated ACL '09 alone added more than $82 million and 871 full-time equivalent jobs to the Central Texas economy. A full 25 percent of ACL visitors came not just from out of town but out of state, with about about 3 percent trekking in from overseas on top of that.

Still, the bottom line is that Summer Fest brought a lot of money to Houston that wouldn't have been here otherwise. Craig said he once did an economic impact analysis for the 2012 Summer Olympics coming to Houston (ha) and estimated that effect as several billion dollars ("big money"). On the other hand, he said expects FPSF to have a much bigger visitor impact than the new Nau Center for Texas Cultural Heritage, now under construction near Minute Maid Park.

More than that, Craig says the Summer Fest study made him take a second look at how much what he calls the "quality of life" around here might bring in to the local economy.

"On average, as economists in town, we're sort of skeptical of the service industries as stimulating much new business in town," he says. "How many people come here from Dallas to go to our museums, even our best museums?

"We're usually skeptical that it's not many," he adds. "But maybe there's more than we think."

Again at Eleanor Tinsley Park, FPSF 2013 is scheduled for June 1 and 2.